For Big Tech, sustainability is an important topic when engaging consumers and developing new products. Microsoft, Apple, Google and Meta have all committed to being either carbon neutral or carbon negative by 2030, and have recognised the value of investing in climate technology and innovation. However, technology companies should remain aware and responsive to the potential risks of “greenwashing” by making misleading claims about their environmental and sustainability commitments.
Already in 2023, there have been significant developments in the greenwashing space which will be relevant for players in the tech industry.
What are the developments?
On 29 March 2023 the Federal Senate agreed to establish an inquiry into greenwashing by Australian corporations. The terms of reference include:
- investigating the environmental and sustainability claims made by companies
- the impacts of greenwashing claims on consumers and legislative options to protect consumers from greenwashing.
The inquiry will focus on industries including energy, vehicles, household products and appliances, which are likely to encapsulate tech companies.
The inquiry follows the ACCC’s announcement in March 2023 that it would be investigating several businesses for greenwashing. This follows the ACCC’s ‘internet sweep’ undertaken last year of around 250 businesses’ websites. The ACCC identified over half (57%) made concerning claims about their environmental credentials. The findings of the sweep will also inform the ACCC’s forthcoming guidance on improving integrity of environmental claims.
Tech companies should also be aware that regulatory bodies have demonstrated a willingness to litigate to enforce greenwashing rules – for example, on 28 February 2023 ASIC announced that it had filed its first claim alleging greenwashing in the Federal Court against Mercer Superannuation (Australia) Limited.
What does this mean for tech companies?
Tech companies should make it clear when their climate targets will be met through methods other than directly reducing pollution from their products or supply chains, such as investing in tree farms or other types of carbon offset.
In addition to ensuring their own claims about commitments and products are not misleading or deceptive, tech companies should also consider whether their products enable greenwashing by other companies.
In a similar vein, be careful when developing tools to help other businesses assess their ESG compliance. Earlier this year, sustainability consulting firm ERM used Microsoft Azure technology to create ESG Fusion, a tool which is stated to assess a company’s ESG risks within two days. Similar AI-powered sustainability tools are likely to emerge as capabilities increase in this area – for example, KPMG recently collaborated with Microsoft to create the KPMG Circularity tracker to help businesses monitor their ESG compliance.
While these tools can massively help businesses streamline their sustainability assessments, companies should exercise caution around the representations they make as to the accuracy and reliability of such tools to ensure they are not enabling greenwashing by end user businesses.
Keeping up with ESG in Australia – April 2023; Keeping up with ESG in Australia – May 2023